FRC Imposes Penalty on Crowe U.K. for Audit Failures Firm Commits to Enhancing Quality Standards

The U.K. Financial Reporting Council (FRC) has imposed a penalty of £144,000 (equivalent to approximately U.S. $181,000) on Crowe U.K. for deficiencies in its audit of Aseana Properties Limited's financial statements for the year ending December 31, 2019. This penalty, announced by the regulator on Tuesday, represents a reduction from the initially proposed amount of £180,000 (about U.S. $226,000), attributed to Crowe's cooperation and measures taken to prevent recurrence of the issues.

The FRC's assessment revealed significant shortcomings in the quality of the audit conducted by Crowe, particularly in areas such as the valuation of inventory, evaluation of fraud risk, and oversight in engagement quality control review. In response to these findings, Crowe has provided written undertakings which will be overseen by the FRC's audit quality review team.

Acknowledging Crowe's prompt cooperation and efforts to address the identified deficiencies, the regulator emphasized the firm's commitment to rectifying the situation once the shortcomings were identified.

In an emailed statement, Crowe expressed satisfaction with the resolution of the matter, highlighting ongoing enhancements to their audit methodology and guidance over the past four years. The firm reiterated its dedication to audit quality and continuous improvement as fundamental priorities.

"We are pleased the matter has been settled," Crowe stated in their email. "We have continued to develop our audit methodology and guidance in the four years since the work was carried out and to make significant investment in our audit business. Audit quality and its continuous improvement remain a key priority for the firm."

By fLEXI tEAM